Midterm 2 Flashcards
In macro issues of growth are generally considered in:
The long run framework
To move from GDP to GNP one must
Add net foreign factor income to GDP
A fall in the price level:
Increases the value of money in people’s pockets so people buy more goods
If the nominal interest rate is 3% and real interest rate is 2% inflation is:
1%
Real GDP can be used more accurately to measure:
The change in market production over time
According to Keynes the economy could become stuck at a low income level of:
Declines in aggregate demand and aggregate supply reinforce one another
The paradox of thrift:
An increase in savings reduces output
The shapes of the curves in the AS/AD model are based:
On the relationship between the price level and total real output
The multiplier effect exists because:
Productions and expenditures are interdependent
Which would shift the AD curve to the right?
An increase in foreign income
An expansionary fiscal policy increases:
Aggregate demand
A policy that raises taxes or reduces govt spending is:
A contractionary fiscal policy
What is not a characteristic of money?
Unlimited supply
Chief difference between M1 and M2 measures of the money supply is:
M2 includes assets with a lower liquidity than those in M1
When a bank makes a loan the money supply:
Increases
